My ISA mistake nearly cost me £2,000 and my £105,000 first home

NOT reading the small print on his savings account nearly cost first-time buyer Connor Blackburn his dream £105,000 house.

Connor, 28, who is a manager at Morrisons, didn’t realise that withdrawing money from his Lifetime ISA (LISA) too soon would mean he would forfeit his 25% government bonus.

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A LISA is a savings account that anyone aged between 18 and 40 can open to save for buying a first home or for their retirement.

You can put in a maximum of £4,000 a year until you’re 50, and the government adds an additional 25% bonus onto what you put in.

You get the bonus if you buy the property at least 12 months after you make the first payment into your LISA.

But Connor said he didn’t clock this condition because he skimmed over his paperwork.

He opened his LISA in March 2021 and stuffed £8,000 into it – which meant he needed to wait until March this year to bag his £2,000 bonus.

But he agreed to exchange in February 2021 – a month earlier.

It meant he had to haggle with the seller to extend the exchange date for the property by a month – or throw away £2,000 in free cash.

After waiting on tenterhooks for weeks, the seller finally agreed and he avoided having to see the house he wanted slip through his fingers.

To make his first-home dream come true, Connor also had to give up the job he loved as a zookeeper and temporarily juggled two higher-paying roles to boost his savings.

Alongside a job at Morrisons, he worked at an entertainment centre for six months, leaving him just one day off work a week.

He also ditched his £60 a month cheese habit and cut down on snacks to reduce his outgoings.

Living with his parents also helped him boost his savings as he didn’t have to pay rent while he was getting a deposit together.

We sat down with Connor to see how he went from being a saver to a homeowner for The Sun’s My First Home series.

Tell me about your home

It’s a three-bed Victorian terraced house in Blackpool, which I found on Rightmove.

There’s an open plan kitchen and dining room downstairs, as well as a lounge.

I’m planning on making one of the spare bedrooms upstairs into a dining room – I don’t need three and I want somewhere to entertain friends and family when they come round.

There’s a garden outside, which is cut into two bits by an alleyway. I use the separate back garden area as a private nook and cranny.

There’s one bathroom.

How did you decide on location?

Blackpool is really near my friends and family.

It’s also near the lakes as well as big cities like Manchester and Liverpool.

House prices in Blackpool were also within my budget.

How have you afforded to furnish it?

I’ve been buying things over the last three years while I’ve been saving for my home.

I’ve only had to buy big items of furniture as I already had lots of mugs and plates.

I want to do some renovation works to the house though and I’m budgeting £10,000 to redo the kitchen and bathroom, and paint all the rooms.

How much did you pay for it?

I paid £105,000 for the house.

My mortgage is £94,500, and I took it out over a 35-year term on a 2.53% fixed rate for five years. 

My monthly mortgage repayments are £339.

I put down a 10% deposit for the house – which was £10,500.

How did you save for it?

I’ve always been a saver, since I was 16 working at the café at my local zoo. 

When I was 18, I started working full-time in the local zoo in Blackpool for 10 years. 

But when Covid hit in 2020, I realised it was a good opportunity for me to seriously start saving money for a house of my own.

So I quit the zoo and juggled two jobs – I worked at Morrisons, and at an entertainment centre. 

This helped me raise nearly two-thirds (over £6,000) of the £10,500 deposit I needed for the house.

I would work six days a week – it was really tiring, but I got £600 a month more from doing this compared to what I was getting at the zoo.

That meant I was stashing away a total of £800 a month over a seven-and-a-half month period.

The remaining £4,500 I needed was covered by savings I had already had.

I also ditched my snacking habit, which was costing me £200 a month on top of my usual grocery food bill.

Because I worked behind the deli counter at Morrisons, I was tempted to buy all the discounted cheese, and I spent £60 a month on this.

But I stopped doing it, as it was a real expense.

The also spent a lot of money on snack when I went to the cinema and going out.

At the cinema, I would buy whole meals’ worth of snacks – from crisps and chocolate to fizzy drinks and sweets – costing me around £20 each time.

And I’d buy unnecessary items from the shops – I’m a sucker for buying anything that is a “new” product.

I was spending £30 extra a week on these bits – adding up to £120 a month.

Buying my cinema snacks from the supermarkets instead and shopping at the supermarket with a list and sticking to it helped me reduce my food bill from £70 a week to £40 a week.

Were there any complications?

The biggest complication, which nearly saw me lose my house, was with my Lifetime ISA (LISA).

I only opened it in late March 2021 – and I didn’t realise that you had to leave it open for at least 12 months before you could withdraw the money for your house and get the bonus.

That’s because I skimmed through all the terms and conditions while I was looking through the paperwork buying my house.

I went from being on top of the world after getting my offer accepted and arranging an exchange date in early February, to hitting rock bottom after discovering my mistake.

I was worried the seller would reject my offer and I’d have wasted money on mortgage advice.

At first I considered forfeiting my £2,000 bonus – I put £8,000 into my ISA in total – but I couldn’t face throwing away the money as I had worked so hard to save.

I was on tenterhooks for a couple of weeks, but the seller finally agreed to push back the exchange date by nearly two months.

Advice for other first time buyers?

Get a Lifetime ISA – you can essentially get free cash from the government for your home.

But read the small print – it’s easy to forget this when you get such a buzz from going through the house buying motions.

If you keep your goal of becoming a homeowner in mind then the process is worth it.

I never thought I would get a house, but I kept myself focused on this outcome.

It’s a place to call your own no matter what happens – and is worth it.

Here’s how one first time buyer quit the job she loved to raise the deposit for her £80,000 first home.

One couple nearly lost their £154,000 first home because they were £9,000 short with just three months to go before exchanging.

Another savvy saver bagged £3,100 in freebies for his first home.

This post first appeared on thesun.co.uk